The Hong Kong Court of Appeal to clarify application of Guy Lam in arbitration in upcoming appeals

By way of an update to the series of recent Court of First Instance decisions on whether a winding up petition ought to be stayed where the underlying dispute is governed by an arbitration clause, Harris J has very recently granted the Petitioner in Re Shandong Chenming Paper Holdings Ltd [2023] HKCFI 2731 leave to appeal.

Notably, Harris J commented that it is highly undesirable to have a number of conflicting Court of First Instance decisions on the same issue (which we have discussed in our blog posts on Lasmos, Simplicity, Shandong Chenming and Inversion Productions) and it would be desirable to have clarity from the higher Courts in this regard. Continue reading

What is the effect of Guy Lam on winding up petitions involving an arbitration clause? A third voice

Where a winding up petition is based on a debt arising from a contract with a non-Hong Kong exclusive jurisdiction clause, the court will tend to dismiss or stay the winding up petition in favour of the parties’ agreed forum unless there are strong countervailing factors. The Court of Final Appeal confirmed this approach in its recent landmark decision in Re Guy Kwok Hung Lam [2023] HKCFA 9 (“Guy Lam“; which we discussed here). However, the Court of Final Appeal specifically left the question open for cases involving an arbitration clause.

Case law from lower courts since Guy Lam has not been consistent in approaching this open question. In Simplicity & Vogue Retailing (HK) Co., Limited [2023] HKCFI 1443 (“Simplicity“) where our firm successfully acted for the petitioning creditor, Linda Chan J took the view that the Guy Lam approach is limited to non-Hong Kong exclusive jurisdiction clauses, and therefore inapplicable where the underlying debt is subject to an arbitration clause (see our blogpost). In contrast, in Re Shandong Chenming Paper Holdings Limited [2023] HKCFI 2065 (“Shandong Chenming“), Harris J took the view that there was no difference in the applicable principles when the underlying dispute was subject to an arbitration clause (see our blogpost). Continue reading

Can you petition for winding up if your debt is subject to arbitration? The debate continues

Following the Court of Final Appeal’s landmark decision in Guy Lam, Hong Kong’s Court of First Instance (the “Court”) considers that winding-up petitions can be stayed by reason of ongoing cross-claims that are the subject of an arbitration clause

Recently, the Court of Final Appeal confirmed that a Hong Kong bankruptcy petition should generally be stayed or dismissed if the debt in question is subject to a non-Hong Kong exclusive jurisdiction clause. Our discussion on this landmark decision of Guy Kwok-Hung Lam v Tor Asia Credit Master Fund LP [2023] HKCFA 9 can be found here.

Since then, the application of the principles Guy Lam has been considered by the Court of First Instance in the context of a winding up petition, which we have written about here. In that case Linda Chan J took the view that the approach in Guy Lam did not apply where, instead of a non-Hong Kong exclusive jurisdiction clause, there is an arbitration clause. Continue reading

Hong Kong Companies Court clarifies the applicability of Re Guy Kwok Hung Lam to cases involving an arbitration clause

In Simplicity & Vogue Retailing (HK) Co., Limited [2023] HKCFI 1443, the Hong Kong Companies Court (the “Court“) made a winding up order against the Company on the basis that it failed to pay security in time. In considering the Company’s opposition grounds, the Court commented that it retains discretion to wind up a company in cases involving an arbitration clause.

Herbert Smith Freehills’ Jojo Fan, Trevor Ho and Jody Luk represented the successful Petitioner.

This is the first case considering the Court of Final Appeal’s (“CFA“) landmark decision in Re Guy Kwok Hung Lam [2023] HKCFA 9 (“Guy Lam“; which we blogged here), which was handed down recently in May 2023 and involved a winding up petition based on a debt subject to a foreign exclusive jurisdiction clause. Continue reading

Hong Kong Court affirms discretion to wind up foreign company, refuses stay to arbitration

In Champ Prestige International Limited v China City Construction (International) Co, Limited and Dingway Investment Limited, the Hong Kong Court of First Instance reaffirmed the court’s discretion to order the winding-up of a foreign-incorporated company on just and equitable grounds, but refused to stay the winding-up petition in favour of arbitration. Continue reading